Public Order/Territorial Support Group (TSG) carrier vehicle replacement procurement strategy

Report: 10
Date: 14 November 2002
By: Commissioner

Summary

The MPS 210 strong fleet of Mercedes Sprinter Public Order/Territorial Support Group (TSG) carrier vehicles is supported by a contract with Mercedes Benz Charterway Ltd that is due to end in mid 2004. The fleet, part-owned and part-leased, is very successfully supported by a full maintenance arrangement provided by the current contractor. This report seeks agreement to go to OJEC competition for a replacement contract that will remain separate from the much larger maintenance contract (with Venson Public Sector Ltd) that is in place for the major part of the remainder of the MPS vehicle fleet. The proposed procurement strategy is to seek tenders for four options that should cover the full spectrum of vehicle fleet management arrangements from output based service delivery through to an MPA owned fleet supported by contract maintenance.

A. Recommendation

Members are invited to:-

1. Approve a Public Order/TSG Carrier Vehicle Replacement Plan based on an OJEC competition leading to contract award in late 2003/early 2004.
2. Approve a procurement strategy that will seek tenders for four options that will cover the full spectrum of vehicle fleet management arrangements less a return to in-house maintenance which has been discarded as both impractical and undesirable.

B. Supporting information

Background

1. The MPS currently has a mixed fleet of 210 Mercedes Benz Sprinter vehicles; 89 are owned by the MPA and 121 leased. Thirty of the 89 are about one year old, the remaining 59 seven years old. The 121 leased vehicles are approximately 5 years old. The current contract with Mercedes Benz Charterway Ltd finishes between March and September 2004; the precise contract dates are related to the introduction to service and transfer to Charterway ownership dates of the individual vehicles. The original 1997 five year contract has already been extended by two years. The contract covers all vehicle maintenance, [1] less collision damage, unfair wear and tear and provision of fuel, for both the 121 leased and 89 MPA owned vehicles.

2. The user, TSG, is very pleased with both the present vehicle and the current contractor’s service. The contract will have cost £11M over 7 years which together with the estimated loss on depreciation of the 89 owned vehicles (of £2.97M) is approximately equivalent to £9,502 per vehicle per year. [2] The intention is to select a new service provider by open competition for contract start in mid 2004.

Aim

3. The aim of this paper is to seek MPA endorsement for the procurement strategy for the replacement Public Order/TSG carrier service.

The requirement

4. The basic requirement is for 180 protected minibuses available at any time. However, in order to guarantee this 100% availability, a number (currently 30) of additional vehicles are held as reserves. The Contractor will be required to produce a minimum of a further 20 vehicles from the reserve fleet given two weeks notice for specific forecast operations. The current contractor is extremely supportive in this respect and routinely produces close to the full fleet when required.

5. The vehicles are protected with reinforced roofs, toughened glass, wire screens and equipped to carry TSG police officers’ public order equipment. Although the vehicles are extensively used, their annual mileage is low and most are serviced on time rather than mileage. An outline requirement, together with a photograph of the current equipment is at Appendix 1.

6. The current choice of suitable vehicles on the commercial market is limited; the current Mercedes Sprinter being one. Front axle loading and availability of an automatic gearbox option are particular difficulties. Value for money is therefore most likely to be influenced by the way in which the whole service is packaged rather than the choice of vehicle.

Wider considerations

7. At present, the MPS has a contract with Venson’s Public Sector Ltd to maintain 2932 of its owned vehicle fleet; the remaining 830 covert/sensitive vehicles are maintained in-house. The Venson contract is due to expire on 28 April 2006. At its meeting on 17 October 2001, the MPS Management Board endorsed the MPS Transport Strategy which is based on the MPA still owning its vehicle fleet rather than leasing or some other arrangement for the provision of vehicles.

8. Nevertheless in order to assure best value for money, it will be necessary to explore the full range of vehicle provision options when we seek to replace the Venson contract. One option, for the replacement carrier service contract is to defer the decision by extending the current arrangement so that it aligns with the end of the Venson contract. However there are two significant arguments against following such a course of action:

• The Venson contract is complex and its replacement is likely to prove to be a difficult exercise without the further complication of including the carrier fleet. The carrier fleet is essentially deployed with one customer, for whom the separate arrangements work well and provide a certain degree of resilience. Adding 210 vehicles to the Venson managed fleet will make very little difference from an economy of scale perspective but will increase the risk.
• Second, the Charterway contract has already been extended once and, in order to assure continued value for money, it should be re-competed rather than extended further.

9. The replacement carrier service contract also provides a valuable path-finding opportunity to explore options for future MPA vehicle fleet management. Although the carrier service is a more specialised requirement and is likely to attract fewer expressions of interest, it nevertheless should provide useful lessons for the next step. In that sense, it could be justifiably regarded as the first step towards the future approach to MPA vehicle fleet management.

Options

10–13. It is proposed to advertise this procurement in OJEC and subsequently seek responses for evaluation for the following broad options:

• Option 1 – Output-based service (contractor owned vehicles)
  A carrier service based on a full maintenance lease but expressed in output terms of available carriers to meet the MPS specification.
• Option 2a – Combined procurement and support (MPA owned vehicles)
   A carrier service based on procurement of carriers to meet the MPS specification through the same contractor that will also provide the support via a full maintenance contract.
• Option 2b – Separate procurement and support (MPA owned vehicles)
   A carrier service based on an independent MPS procurement of the carrier vehicles to meet its specification but that are then subsequently supported by a separate maintenance contractor.
• Option 3 – Other proposals
  Any other proposal that the bidders wish to make that, in their opinion, could provide better value for money service to the MPS. Quoting against this option is only acceptable if bids have also been provided against Options 1, 2A & 2B.

In-house maintenance

14. Any option that would include re-creating an MPS in-house maintenance capability has been discarded on the basis that such an approach would be both impracticable and undesirable. The MPS only divested itself of the majority of its previous, large in-house maintenance workshop infrastructure as recently as 1998. Moving that function back in house would require procurement of workshop premises, the re-formation of a large in-house workforce and should therefore be regarded as an option of last resort.

Disposal of MPA-owned vehicles

15. The attention of potential contractors will be drawn to the existence of the current MPA owned fleet of 89 Mercedes Benz Sprinter vehicles and they will be asked to factor the run-on or disposal of these vehicles into their proposals.

Procurement timetable

16. The outline procurement timetable is illustrated at Appendix 2. The intention is plan to achieve contract let and start in time to replace the current arrangements over the period March to September 2004. However, depending on the choice of contractor, contract start may be slightly delayed by the lead-times associated with vehicle build. Under those circumstances, approval will need to be sought in due course for a small further extension to the Charterway contract to align with the start of the new service.

C. Equality and diversity implications

There are no equality or diversity issues with the replacement carrier service contract.

D. Financial implications

1. The existing capital programme and revenue budget contain provisions for the replacement of the fleet recognising that there is a mix of directly owned and leased vehicles. The invitation of tenders with alternative bases of procurement would give options for changing the current balance of that mix. If all vehicles were to be directly purchased, additional resources would need to allocated for this purpose within the capital programme.

2. Similarly, if more vehicles were to be leased additional revenue funding would be required for the leasing payments in the revenue budget. account will therefore need to be taken of the availability of Capital and Revenue resources in letting a contract when tenders have been returned and an assessment carried out of the relative advantages of the different options for procurement.

3. The proposed procurement strategy deliberately seeks tenders for options that include both capital purchase and lease. Value for money and financial implications for the MPA/MPS will feature as two key criteria in the evaluation of bidders’ proposals.

E. Background papers

None

F. Contact details

Report author: Director of Transport Services, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Send an e-mail linking to this page

Feedback